Mrs Merkel is said to have raised the subject last Monday in a telephone call with Mr Cameron before Michael Link and David Lidington, the European affairs ministers from the two countries, discussed in Berlin a few days later.

It is understood she is trying to persuade Mr Cameron to back a German compromise that would cap EU spending at one per cent of European gross domestic product.

After last week’s summit, Mr Cameron bluntly stated his willingness to veto any deal involving increases in EU spending.

“If there isn’t a deal that’s good for Britain, there won’t be a deal,” he said. “We can’t have European spending go up and up and up when we are having to make difficult decisions in so many different areas.”

Spokesmen for both leaders have not publicly commented on the newspaper's report.